Federal government employment surges during the recession

February 24, 2011

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The federal government has been on something akin to a hiring spree since the start of the Great Recession, according to a recent analysis from The Heritage Foundation.

Since December 2007, the size of the federal workforce-excluding Census and Postal workers-has grown by 230,000 positions, an increase of 11.7 percent. Meanwhile, private sector employment for the same period has fallen by roughly 7.5 million positions, representing a decrease of 6.6 percent.

The problem, of course, with such a large increase in federal employment is that it redirects resources away from productive activities and into non-productive ones.

As more thoroughly explained by Heritage analysts James Sherk and Rea Hederman:

“The resources the government spends do not materialize out of thin air-they are taken from the private sector. Research shows that government spending crowds out private investment. Each $1 increase in government spending reduces private-sector investment by between $0.46 and $0.97 after two years and $0.74 and $0.95 over five years. Government spending substitutes for private-sector investment; it does not supplement it. Increased government spending further reduces private-sector investment, making the problem of low job creation worse.

Moreover, government spending misdirects economic resources. Political priorities, not economic return, drive government spending. The desires of influential Members of Congress and political fads determine where government appropriations are allocated. This often differs greatly from the use that creates the most wealth and jobs.”